Subject pretty much says it all. The new mt-daapd code works fine with iTunes 5 so long as you aren’t using password protection. If you do, iTunes sees the playlist, but upon connecting immediately disconnects, but with no error message.
Raising the debug level in mt-daapd shows lots of ‘401 Unauthorized’ errors. Using an mDns proxy I can see a few differences between standard iTunes shares and mt-daapd, such as the lack of a “Password=true” entry in the host properties. Also, iTunes shares seem to show up with “_PW” appended to the share name.
I don’t know if any of these differences are significant, but I figured this was as good a place as any to start.